We recently compiled a list of the 10 Best Construction Stocks to Buy Now.In this article, we are going to take a look at where CEMEX, S.A.B. de C.V. (NYSE:CX) stands against the other construction stocks.
As per Cumming Group, which provides project and cost-management services, the construction industry kicked off 2025 with a healthy momentum, thanks to the robust fundamentals from 2024. The firm also mentioned that the Dodge Momentum Index (DMI), which helps measure non-residential building spending, demonstrated steady growth as it wrapped up 2024 with a healthy 10% increase, implying confidence in owners and developers. Overall, the commercial real estate sector continues to witness a significant evolution, mainly in office spaces, where work-from-home and hybrid work arrangements transformed occupancy trends.
Outlook for the Construction Sector
Amidst increased interest rates, uncertainty related to various tariffs, and price inflation impacting residential and commercial segments, Cumming Group opines that positive indicators are also emerging. The construction investment, mainly fueled by government spending, has been providing much-needed stability to the broader sector. Moving forward, the sector’s ongoing resilience and adaptability place it well for the year 2025, despite uncertainty regarding tariffs. Apart from this uncertainty, healthy employment numbers, and consistent government investment, together with potential interest rate relief, create a strong foundation for sustained growth.
As per PHCPPros, which covers aspects of the plumbing, heating, cooling, and piping industry, ConstructConnect’s 2025 forecast for a total construction spending increase of 8.5% is broad-based, with residential and non-residential building construction projected to expand by 12% and 8%, respectively.
Key Drivers Likely to Boost the Construction Sector
PHCPPros opines that the declining interest rates due to the US Fed’s focus on reducing Fed Funds Rate, an instrument indirectly influencing the private sector borrowing rates, is likely to be the primary driver of the growth. The reduced rates are expected to help reinvigorate non-residential construction activity and residential housing market activity. Notably, lower rates and the ensuing improvement in housing affordability can ease the gridlock in sales due to the combination of increased home prices and elevated interest rates.
Furthermore, the electrification of the economy is expected to fuel strong demand for power generation and power infrastructure projects. The growth of AI, higher EV adoption, and the increased dependency on electric appliances and devices are expected to stimulate the need for electric generation and infrastructure construction moving forward. These measures are expected to fuel the demand for megaprojects.
Our Methodology
To list the 10 Best Construction Stocks to Buy Now, we used a screener to shortlist companies catering to the broader construction sector. Next, we filtered out the ones that were popular among hedge funds. Finally, the stocks were arranged in ascending order of their hedge fund sentiments, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A pile of cement on the top of the wheelbarrow in construction site.
CEMEX, S.A.B. de C.V. (NYSE:CX) is engaged in producing, marketing, distributing, and selling cement, ready-mix concrete, aggregates, urbanization solutions, and other construction materials and services. Given the recovery of its investment grade ratings, improvement in FCF generation, and the execution of US$2.2 billion in asset divestments, CEMEX, S.A.B. de C.V. (NYSE:CX) remains focused on pursuing more aggressively its capital allocation priorities of growth via small to medium-sized acquisitions, mainly in the US and additional deleveraging.
CEMEX, S.A.B. de C.V. (NYSE:CX) has rolled out “Project Cutting Edge,” a 3-year, US$350 million saving initiative focused on streamlining operations and improving efficiency, significantly leveraging digital technology across the company. This program can deliver US$150 million in incremental EBITDA in 2025, expecting to reach a run rate of US$350 million by 2027. The global building materials sector is expected to witness favorable conditions in 2025, offering opportunities for CEMEX, S.A.B. de C.V. (NYSE:CX) to capitalize on the broad-based industry growth.
The expected decline in interest rates can stimulate construction activity, fueling sales across the company’s markets. Regarding the US, CEMEX, S.A.B. de C.V. (NYSE:CX)’s margins continue to be aided by cost optimization efforts, reduced fuel prices, and lower imports, together with increased prices of its products. It expects 2025 volume growth to be aided by a ramp-up in IIJA projects, industrial projects, and data centers.
Overall CX ranks 8th on our list of the best construction stocks to buy. While we acknowledge the potential of CX as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than CX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
